KEY POINTS:
An established trend for Australian retailers to move in on New Zealand shopping centres has picked up momentum in the past two or three years.
But retail industry leaders John Albertson and Win Robinson say some Australians are deciding to set up shop here based on a fundamental misunderstanding.
The two markets are quite different.
The experience of the Kiwi Property Income Trust illustrates the scale of the current influx.
The owner of Auckland's new Sylvia Park shopping centre has 10 Australian tenants that are new to this country.
"Howards, Storage Bed Bath and Table, Kookai, Secret Shhhh, Shoo Biz, Roxy, and Christopher Chronis Design, Playboy ... the list goes on," says KPIT chief executive Angus McNaughton.
He says those Australian firms arriving here in the current wave are looking for several sites, not just one or two.
"The nature of international retailing is that you need scale to make expansion viable."
Australian retailers want to roll out several stores here but there is just not enough prime retail space available, says McNaughton.
"We [New Zealanders] might not like it," he says, "but Australian retailers think of it like moving into a different state. To an extent culturally they are very similar, but there are differences as well."
New Zealand Retailers Association chief executive John Albertson and international franchising consultant Win Robinson agree.
"A lot of those that came in during the early days - eight to 10 years ago - arrived here thinking it was just like going to another state of Australia," says Albertson.
"Some had to readjust the scale of their businesses once they worked out that was not the case.
"The hardest thing to get their head around is the volume of people passing each store compared to Sydney or Melbourne. There is just less foot traffic. The psyche is different - the attitude to outdoors and indoor living.
"You cannot assume that because we have the same language and genetic stock we act the same way."
For successful companies that are outgrowing the Australian market the green grass here can seem attractive.
But, Albertson says, "The New Zealand market is already hugely competitive and getting more so.
"The concern is that you are chasing a brand share with pressure on margins and earning.
"New Zealand is marked by major chains competing fiercely then small independent niche retailers that really need a significant point of difference."
International franchise consultant Robertson agrees and says some Australian franchisors do too little homework before moving. And some have failed because of that.
He says the franchise market in New Zealand is less regulated here and companies are structured differently due to the absence of capital gains tax.
Robinson has been commissioned by the Queensland Government to assist franchises into the New Zealand and says that 70 per cent of Australian franchises are planning to expand here.
Albertson acknowledged that there is a global trend for retail chains to expand internationally.
Harcourts, Pumpkin Patch and Michael Hill Jeweller are among New Zealand retail brands active in Australia, as well as other countries.
New Zealand's retailers have similar issues when they move in on the Australian market.
There is one more positive factor for New Zealand businesses expanding into Australia than vice versa - it is richer.
Briscoes Group chief executive Rod Duke is an Australian who arrived in this country 20 years ago. His first impression was that there was a lot less money around.
